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Kenya’s student housing market expands, creates room for hostel investors

By Steve Umidha
Tuesday, May 4th, 2021
Housing project. Photo/Courtesy
In summary

DEMAND: A surge in student enrolment into higher educational institutions has provided real estate developers an opportunity to cash in on the accommodation sector.

Current supply falls short of demand with Kenya National Bureau of statistics 2019 Economic Survey showing that student population in universities and vocational centres stood at 796,000 in 2017/18 and was expected to grow by 15.5 per cent to 919,400 in the 2018/19 academic year.

The numbers are expected to increase this year as universities and college age demographic continues to grow.

Kenya Universities and Colleges Central Placement Service board estimates that more students who sat this year’s Form Four examinations, may surpass the 80,000 who sat last year’s KCSE for admission to join various universities and colleges.

Higher education sector has 52 public, private and constituent university college institutions with a total student population of 769,500, which accounts for 40 per cent of the country’s total housing shortage – representing an annual increase of 20 per cent in newly enrolled students.

The increase in high student enrolment is being attributed to the introduction of the self-sponsored module and the directive issued in 2011. 

The move has provided a huge opportunity to private developers who have been building hostels near universities to house learners who cannot find shelter within their campuses. 

The concept has seen several colleges in the last five years exploring the Public Private Partnership (PPP) model as a means to solve the housing crisis. Under this model, a developer builds a hostel, operates it for about 20 years to recoup his investment before handing over the facility to the university.

The PPP model, which is increasingly gaining popularity worldwide, is viewed as a favourable avenue for investors to put money into the public education sector to supplement State funding.

Student hostels developer, Student Factory, for instance, last week broke ground for the construction of a Sh5 billion property – making it the largest commercial students’ hostels facility in the market.

Student Factory Africa, a consortium of architects, announced its entry into the Kenyan market in March and has partnered with a Dutch-based private equity company on the project to put up a 4,500-bed student accommodation.

Private developer

The project will be the largest by a private developer and will surpass a similar concept by Acorn Holdings which has lined up two new projects next to the University of Nairobi’s Chiromo campus that will host about 3,000 students.

Acorn, known for its accommodation brands Qwetu and Qejani, last year announced that it will spend part of the Sh4.26 billion green bond resources to erect two properties, one being an 18-floor property to host 704 units accommodating 2,112 students.

Speaking during the groundbreaking ceremony, Student Factory Africa CEO Christopher Osore said the first phase of the new student hostel in Karen will initially consist of 10 five-storey buildings with the construction planned to last 24 months.